GLOBAL INFORMATION AND EARLY WARNING SYSTEM ON FOOD AND AGRICULTURE 
WORLD FOOD PROGRAMME 

SPECIAL REPORT

FAO/WFP CROP AND FOOD SUPPLY ASSESSMENT MISSION TO INDONESIA

17 April 1998


 
 

MISSION HIGHLIGHTS

  • A combination of severe drought and unprecedented financial crisis has seriously undermined Indonesia’s food security. 

  •  
  • 1998 paddy output forecast to decline by 3.6 percent below 1997 and 6 percent below the 1996 harvest, due to the worst drought in decades. 

  •  
  • Output of secondary foodcrops such as maize, soybeans, roots and tubers and groundnuts is forecast to increase in 1998 reflecting a shift of area from paddy. 

  •  
  • Rice import requirements for 1998/99 (April/March) are estimated at a record 3.5 million tonnes, even assuming a normal secondary rice crop for harvest in August. 

  •  
  • Indonesia’s commercial import capacity to cover the entire rice deficit is seriously constrained due to the financial crisis; some 40 percent of the shortfall is anticipated to be covered by commercial imports. 

  •  
  • International assistance is required for the supply of 2 million tonnes of rice in the form of loans, grants, concessionary imports and targeted food aid. 

  • An estimated 7.5 million people in 15 provinces are likely to experience acute food shortages unless food assistance is provided. 
 



1. OVERVIEW

One of the severest droughts in this century associated with the El Niño phenomenon and the unprecedented financial crisis have dealt a severe blow to Indonesia’s food security. The current drought cycle, which began in early 1997, reduced last year’s aggregate food production and seriously affected the islands of Eastern Indonesia. Planting of this year’s crop season was delayed by up to two months, followed by irregular and below-normal rains in many parts of the country, leading to fears of a significant drop in 1998 foodcrop production. This coincided with a depletion of rice stocks as a result of last year’s reduced production and import volumes and a serious erosion of the purchasing power of a large section of the population due to high inflation caused by an over 70 percent devaluation of the currency against the US dollar and rising unemployment.

In view of an unfavourable food security outlook, an FAO/WFP Mission visited Indonesia to assess the 1998 crop and food supply situation and determine food import requirements including relief food aid needs of the affected population. From 9 March to 1 April 1998, an 11 member team (including 7 national experts) visited 26 of the country’s 27 provinces. Information on the province not visited, East Timor, was obtained from ICRC. This was the first ever FAO/WFP mission of this nature to Indonesia and constituted the only international effort to assist the Government of Indonesia in assessing its current crop and food situation on a country-wide scale. The Mission received support from the United Nations Development Programme (UNDP).

The Mission held discussions with central, provincial and district authorities, interviewed farmers, traders and key local informants, contacted research institutions, undertook field inspections and market surveys, consulted with UN agencies, the bilateral and multilateral donor community and NGOs, and examined existing special studies, seminar conclusions and recommendations, and reports of field missions to selected areas.

The Mission forecasts the 1998 paddy harvest at 47.5 million tonnes, 3.6 percent below last year’s already reduced production, 6.2 percent below the 1996 harvest and 11 percent below the official target. Over 90 percent of the decrease in paddy production is due to the reduction in planted area as a result of the delayed onset of rains. As farmers shifted planting from paddy to secondary (palawija) crops such as maize, soybeans, roots and tubers and groundnuts, production of these is forecast to increase, providing some food security cushion. All production estimates critically hinge on El Niño related developments during the remainder of 1998. A supplementary rapid crop assessment in about three months’ time would be important for re-assessing the prospects for this year’s secondary harvest and to firm up the aggregate production and cereal import requirement estimates.

Based on the current production forecast and the utilization needs, the Mission estimates a record rice import requirement of 3.5 million tonnes in the 1998/99 marketing year (April/March). However, this estimate must be treated with caution as it is based on the assumption of more or less normal weather during the second crop season of 1998, which accounts for one-third of the total production. A renewed drought would further increase the rice deficit.

Against the rice import requirement of 3.5 million tonnes, the Indonesian Government plans to import some 1.5 million tonnes between April and September 1998. With commercial import capacity seriously constrained for further imports, this would leave an uncovered deficit of 2 million tonnes, for which international assistance will be required in the form of rice loans, grants, concessionary imports and targeted food aid. It should be noted that the country will also need to import some 4 million tonnes of wheat during 1998/99, which will impose a further strain on its already overstretched import capacity.

The effects of tight rice supplies on food security are exacerbated by the severe financial and economic crisis, which has sharply reduced the country’s capacity to import food, feed and other agricultural inputs. It also has caused food and other prices to rise sharply in recent months as well as growing unemployment, thus diminishing access to food by a large segment of the population. A cause for serious concern is the large and growing population groups facing acute food insecurity. The number of people needing food assistance could grow to some 7.5 million between mid-1998 and the beginning of the next main harvest in March 1999.
 



2. THE INDONESIAN ECONOMY AND CURRENT FINANCIAL CRISIS

[ Sources used in this section include World Bank, IMF and the EIU reports.]

2.1 The economy and the impact of the current financial crisis

Indonesia is the world’s fourth most populous country, with an estimated population of 203 million in 1998. It is a geographically vast country extending for more than 4 800 km from west to east and 2 000 km from north to south, between the Asian mainland and Australia. It has a highly diverse archipelagic structure consisting of some 17 000 islands, of which 6 000 are inhabited.

The country is endowed with substantial agricultural potential, as a result of which agriculture has historically been an important activity, in terms of both employment and output. In addition, there is a vast range of mineral resources, including petroleum, the extraction of which has proceeded rapidly during the past three decades. The manufacturing sector has also expanded dramatically, especially since the mid-1980s. In 1991, the share of manufacturing in GDP exceeded that of agriculture for the first time, and now stands at 25 percent as compared to 16 percent for agriculture (1996). The service sector accounts for some 41 percent of the GDP, employing some 30 percent of the workforce.

Exports have increasingly provided the main engine of growth of the Indonesian economy. Before the mid-1970s, exports consisted mainly of a small number of primary commodities, including natural rubber, coconut oil and copra, tin and crude oil. The sharp increase in petroleum prices and the development of Indonesia’s natural gas in the mid-1970s resulted in these two products emerging as the dominant sources of national wealth. The decline in petroleum prices after 1983 led to a concerted push towards export-oriented industrialization, as a result of which semi-processed and manufactured products have increasingly come to dominate exports. The GDP in 1996 stood at US$226 billion (or US$1 149 per head), with a real growth rate of 7.8 percent. By contrast, the GDP in 1997 fell and 1998 shows a declining trend.

The country’s present Five-year Development Plan (Repelita VI - April 1994-March 1999) represents the first phase of the Second 25-year Long-term Development Period, which is intended to lead Indonesia’s "take-off" as a modern industrial economy by 2020. The overall GDP growth rate target of Repelita VI is 7.1 percent per year. Economic growth is to be achieved jointly with the objectives of equity and stability. Performance of the first three years was well above target, with 7.5, 8.2 and 7.8 percent, respectively but, as noted above, there was a decline in 1997 and another in prospect for 1998.

In the wake of the Asian financial crisis the Indonesian rupiah began to come under pressure in August 1997 and rapidly depreciated in the following months. Combined with the drought, the depreciation of the rupiah resulted in large increases in prices, particularly that of food prices. The large scale liquidity support provided by the Bank of Indonesia created additional pressure on the exchange rate and international reserves. In addition, the cut in trade and other credit lines by foreign banks to Indonesian banks and enterprises squeezed the supply of imported inputs essential for production.

On 31 October 1997, Indonesia won a pledge of about US$43 billion in foreign loans and loan guarantees from the IMF and other international bodies provided that certain financial and economic reforms were put in place. The agreement did not stabilise the rupiah, which together with other south-east Asian currencies took a further sharp dip to new record lows in the ensuing months. The rupiah, which was trading at 2 450 to the dollar in July 1997 plunged to a low of 12 000 to the dollar before strengthening to around 8 000 in early April 1998. The construction and manufacturing sectors of the economy reacted to the crisis by laying off workers, adding to the level of unemployment which has risen to an estimated 8-9 million.

Until mid-1997, the Government of Indonesia had made impressive progress in a number of social areas including poverty alleviation, employment generation and ensuring adequate access to food by the poorer sectors of the population. Since the onset of the financial crisis in August 1997 these trends are in reverse.

Recent financial reports indicate that the revised economic and financial programme in early April, envisages that the exchange rate would strengthen rapidly during the first quarter of 1998/99 and that inflation would decelerate but may still amount to over 45 percent during 1998 as a whole. The programme allows for a close scrutiny of the progress in reform, setting specific targets for eliminating all restrictions on foreign investment in wholesale trade and establishing a level playing field in the import and distribution of essential food items between BULOG and private sector participants. Target dates are set to eliminate subsidies on some commodities. The policy programme also allows for the increase in subsidies for food and essential items and the introduction of community-based work programmes to sustain the purchasing power of the poor in both rural and urban areas. Furthermore the Bank of Indonesia is required to publish key monetary data on a weekly basis.

2.2 The agricultural sector in the national economy

Agriculture, including forestry and fisheries, is the most important sector of the economy in terms of employment. The 1990 census showed that its share in total employment was 55 percent, unchanged from the previous census in 1980. At present, the sector is estimated to employ 41 percent of the country’s labour force. The agricultural sector is also one of the largest sources of national income, though with a decreasing share as Indonesia’s industrial development advances. In the early 1970s, it contributed some 33 percent of GDP; its share decreased to some 23 percent by the early 1980s and to 16.3 percent in 1996.

Indonesia is among the world’s leading producers and exporters of a wide range of agricultural commodities, which in 1995 accounted for 33 percent of non-oil/gas export revenues. It is the world’s No.1 producer of coconuts, ranks second in world production of copra, palm kernels and palm oil, as well as natural rubber, and is the third largest producer of rice. The country’s arable land is estimated at some 19 million hectares. The food crop subsector is almost entirely in the hands of smallholders, and concerted efforts have been made by the Government since the mid-1960s to raise its productivity through the application of "Green Revolution" technologies. Rice and maize account for some 80 percent of the food crop area; the share of rice alone is about 60 percent. The cash crop subsector is composed of smallholder cultivators, largely privately owned commercial estates and state-owned plantations.

Foodcrop production is heavily concentrated in Java, followed by Sumatra and Sulawesi. Java accounts for approximately 60 percent of the country’s rice and maize production, Sumatra for about 20 percent, and Sulawesi for some 10 percent. Taken together, these three islands produce 90 percent of the country’s two main staple foods.

Growth rates of the agricultural sector have been significant. They averaged 4.2 percent annually from 1975-85, and then slowed down to 3.4 percent from 1986-96. Self-sufficiency in rice, the principal staple food, has been a strategic objective of Indonesian agricultural policy; this objective was achieved in the mid-1980s. However, in the 1990s production has begun to fall again behind demand, with rice imports amounting to 1.8 and 3.0 million tonnes in the 1994/95 and 1995/96 marketing years, respectively, decreasing to less than 500 000 tonnes in 1996/97. During the 1970s Indonesia was the world’s largest importer of rice. In the period 1970-80 the country’s annual rice imports averaged 1.5 million tonnes. In the 1980s, rice production showed impressive growth and imports declined sharply until the mid-1980s, when the country not only achieved self-sufficiency in rice, but also generated surpluses which were loaned out to some countries in the region. During this production boom Indonesia also provided some food (rice) aid to Africa. With the productivity gains levelling off in the early 1990s Indonesia’s rice deficit showed a rising trend with the peak reached in 1995 when some 3 million tonnes of rice was imported due to a drought-affected crop in 1994.

Growth in the agricultural sector has been instrumental in reducing poverty. The incidence of poverty decreased from over 40 percent in rural areas in 1976 to 14 percent in 1997. However, the trend is reversing due to the financial crisis, which is leading to increasing numbers falling below the poverty line.
 


3. FOOD CROP PRODUCTION FORECAST FOR 1998

3.1 The 1997/98 El Niño related drought

Indonesia’s crop seasons are determined by the pattern of the monsoon winds which generate two main seasons referred to as "wet" and "dry" seasons. The wet season normally runs from October to March and produces some 60 percent of the country’s annual rice crop and half of the annual maize, soybean and groundnut crops. The dry season covers the period of April to August/September when most of the remainder of the annual crop is produced. However, in western Indonesia, which produces 80-90 percent of Indonesia’s rice and maize crops, rainfall occurs throughout the year with a seasonal peak during the October to March period. In Eastern Indonesia and especially in Nusa Tenggara and Timor the precipitation becomes progressively less with increasing proximity to the Australian desert.

With the exception of the 1995-96 growing season, most of this decade has seen unfavourable weather conditions. The persistence of such conditions has placed a heavy burden on smallholder farmers, especially single-crop maize producers in eastern Indonesia. The 1997/98 El Niño is remarkable not just because of its severity, but because it has had two distinct peaks. It began between February and April 1997 and reached its first peak in July and August. This coincided with large-scale forest fires in Kalimantan and Sumatra and with a combination of drought and frost in Irian Jaya. Some 500 000 hectares were affected by the drought, of which 85 000 hectares experienced severe crop losses.

The current El Niño phenomenon began to develop in late 1997 toward a second peak and has continued its increase to March 1998. Its impact on the 1998 crop season has so far manifested itself in a one to two months delay in the onset of rains in the last quarter of 1997, which delayed planting throughout the country, followed by irregular rainfall in Sumatra, Sulawesi, much of Kalimantan and Eastern Indonesia. But after the delayed onset, rains were regular in most of Java and in Irian Jaya, the latter particularly having been severely affected by the 1997 drought.

Chart 1 shows the sharp reduction of precipitation in various regions of the country in 1997 compared to the two preceding years, the most severe reduction occurring in Irian Jaya, Kalimantan and Sulawesi.

Undisplayed Graphic
Undisplayed Graphic
Undisplayed Graphic

Apart from its delayed onset, the cumulative rainfall during the 1997 cropping season has been well below normal throughout the country. The monthly rainfall in 1997 compared with the previous year main producing regions in the provinces of Java and Sumatra is shown in Charts 2 and 3.

The crop conditions during the 1997/98 main season throughout the country are shown in the map below.

It is difficult at this stage to gauge the prospects for the secondary rice crop, the planting of which has been delayed by up to two months due to the late onset of the rains. The crop, which normally accounts for about one-third of the total food production, will be planted in April/May for harvest from August onward. With water levels in rivers and lakes reported to be low in several areas, a renewed prolonged drought during the growing season could seriously reduce yields and production in 1998.

The critical question is how El Niño will affect the forthcoming cropping season. The National Meteorological Agency is cautiously optimistic in predicting a normal season with 50 percent probability, giving a renewed drought only a 15 percent chance. It forecasts normal to above normal rainfall in 60 percent of its 102 meteorological areas. However, a re-assessment of the situation in about three months’ time will be important for eventual adjustments to the current 1998 crop forecast and food import and assistance requirements.

Map of Crop conditions following drought impact


3.2 Harvested area

Notwithstanding the severe drought, the aggregate harvested area for foodcrops as a whole is forecast to remain similar to last year’s level of 17.7 million hectares, but below the 1996 level. There are, however, significant crop-specific changes. For the second consecutive year, paddy area is estimated to decline - by some 380 000 hectares or 3.4 percent to 10.7 million hectares. Last year, it declined by 3.9 percent. With the delay in the onset of rains, many farmers shifted to planting maize, and the harvested maize area is forecast to increase by about 266 000 hectares or 8 percent to 3.6 million hectares. The other major increase is forecast for soybeans, with an additional 129 000 hectares to 1.2 million hectares, an increase of some 12 percent. For sweet potatoes, the crop area is estimated to increase by 14 percent to 222 000 hectares; but given the small size of sweet potato area, this increase translates only into an additional 27 000 hectares. Table 1 shows the regional distribution of the estimated crop area.

3.3 Yields

The effect of drought on the paddy crop was not as serious as anticipated earlier. The bulk of the main paddy crop is irrigated, hence overall yields show less fluctuations. The Mission forecasts paddy yields of 4.4 tonnes/hectare, about the same as last year’s reduced level, with a regional range from 2.5 tonnes/hectares in Kalimantan to 5.2 tonnes/hectare in Java. Average yields of maize are estimated at 2.6 tonnes/hectare, with a range from 1.3-1.4 tonnes/hectare in Kalimantan and Maluku/Irian Jaya to 2.8 tonnes/hectare in Sulawesi and Java.

Yields of the remaining secondary crops are expected to increase by varying degrees. Soybean yields are expected to increase modestly over last year’s yields, to 1.2 tonnes/hectare - an increase of 1.3 percent. A 5.7 percent increase is forecast for cassava, raising yields to 13 tonnes/hectare; this may be partly explained by the distribution of improved planting material by the Government. Modest increases are forecast for sweet potatoes (1.8 percent to 9.7 tonnes/hectare), while groundnut yields are expected to increase by 3.7 percent to 1.1 tonnes/hectare. The low incidence of diseases and pests as a result of drought has also contributed to some gains in yield levels in some crops.
 

Table 1. Indonesia: Harvested area: Rice and other foodcrops by region, forecast 1998
 
Rice  Maize  Soybeans  Cassava  Sweet potatoes  Groundnuts  Total 
Region  Area 
(000 ha) 
Area 
(000 ha) 
Area 
(000 ha) 
Area 
(000 ha) 
Area 
(000 ha) 
Area 
(000 ha) 
Area 
(000 ha) 
%
Sumatra  2 865  26.8  718  19.8  260  20.8  265  20.8  46  20.7  109  16.8  4 263  24.1
Java  5 247  49.1  1 970  54.5  719  57.6  739  58.0  76  34.4  397  61.3  9 149  51.7
Bali, N.T.  619  5.8  314  8.7  138  11.0  126  9.9  30  13.3  51  7.8  1 277  7.2
Kalimantan  923  8.6  65  1.8  28  2.3  46  3.6  10  4.3  28  4.3  1 099  6.2
Sulawasi  995  9.3  520  14.4  93  7.5  75  5.9  18  8.1  53  8.2  1 755  9.9
Maluku/Irian  43  0.4  30  0.8  11  0.8  23  1.8  43  19.2  10  1.6  159  0.9
Total 1998  10 693  100  3 617  100  1 249  100  1 274  100  222  100  648  100  17 703  100
Total 1997  11 072  3 350  1 120  1 234  195  628  17 599 
Change 1998 over 1997 (%)  -3.4  +8.0  +11.5  +3.2  +13.9  +3.2  +0.1 

3.4 Production forecast for 1998

The Mission estimates a decline of the 1998 paddy harvest of 3.6 percent compared to last year’s already reduced harvest, which is essentially due to reduced paddy area (Table 2). Compared to the "normal" year of 1996, the cumulative decrease would amount to 6.2 percent. Given a population increase of some 3.2 percent since 1996, the output reduction in 1998 on a per caput basis amounts to about 10 percent over 1996. It is therefore of little consolation, that this year’s harvest is expected to be better than that of the previous El Niño year of 1994.

On the other hand, maize production is expected to be over 10 percent above last year’s harvest, again largely as a result of a switch in area from rice. It is also forecast to exceed the 1996 production by close to five percent. A similar increase is expected for cassava, from the combined effect of significant yield increases and some growth in harvested area. The largest relative increase (18 percent) is estimated for sweet potatoes, but the total quantities involved are relatively small.
 

Table 2. Indonesia: Forecast 1998 foodcrop production compared with previous years (‘000 tonnes)
 
Crops  1998 Mission
Forecast 
1997 1/ 
(Prelim.) 
1996 2/  1994 3/  % change 1998
over 1997 
% change 1998
over 1996 
% change 1998
over 1994
Paddy  47 456  49 206  50 575  46 642  -3.6  -6.2  1.7
Maize  9 576  8 663  9 142  6 869  10.5  4.8  39.4
Soybean  1 533  1 357  1 510  1 565  13.0  1.5  -2.0
Cassava  16 592  15 037  16 910  15 729  10.3  -1.9  5.5
Sweet Potatoes  2 162  1 835  2 029  1 845  17.8  6.6  17.2
Groundnut  736  685  747  632  7.5  -1.4  16.5

Table 3 shows 1998 production estimates by region and province. It confirms the general distribution pattern of production of the major crops between the main producing islands, i. e. close to 60 percent are produced in Java, some 20 percent in Sumatra and about 10 percent in Sulawesi (15 percent in the case of maize).
 

Table 3: Indonesia: 1998 Foodcrop Production Forecast by Region and Province (‘000 tonnes) 1/
 
REGION/ 
PROVINCE 
PADDY  MAIZE  SOYBEAN  CASSAVA  SWEET POTATOES  GROUNDNUTS
SUMATRA  10 602  1 807  309  3 081  415  136 
Banda Aceh  1 630  69  183  141  41  50 
North Sumatra  3 019  409  37  425  116  31 
West Sumatra  1 722  48  10  95  35  10 
Riau  416  41  10  69  15 
Jambi  513  20  10  101  18 
South Sumatra  1 426  83  17  396  42  15 
Bengkulu  321  61  11  109  119 
Lampung  1 555  1 076  30  1 744  30  11 
JAVA  27 288  5 517  912  10 283  869  444 
DKI Jakarta 
West Java  9 851  514  77  1 842  406  93 
Middle Java  8 222  1 704  222  3 874  205  144 
DI Yogyakarta  676  138  85  726  12  47 
East Java  8 539  3 161  528  3 841  246  161 
BALI & NUSA TENGGARA  2 582  654  150  1 262  288  56 
Bali  841  92  29  211  83  19 
West Nusa Tenggara  1 274  61  112  130  32  26 
East Nusa Tenggara  467  502  920  173  11 
KALIMANTAN  2 311  93  30  566  79  30 
West Kalimantan  826  37  217  17 
Middle Kalimantan  303  72  10 
South Kalimantan  1 012  34  11  159  23  23 
East Kalimantan  170  13  118  28 
SULAWESI  4 540  1 462  122  1 177  136  59 
North Sulawesi  328  125  51  31 
Middle Sulawesi  398  30  10  53  20 
South Sulawesi  3 600  1 234  101  886  72  48 
South East Sulawesi  214  73  187  13 
MALUKU & IRIAN  133  43  10  223  375  11 
Maluku  42  35  180  88 
Irian Jaya  91  43  287 
TOTAL INDONESIA  47 456  9 576  1 533  16 592  2 162  736

1/ Production data for East Timor not available. In normal production years, the province produces 50 000 tons of paddy, 100 000 tons of maize and small quantities of groundnut and soyabeans. According to ICRC, foodcrop output in 1997/98 is unlikely to exceed 40 percent of normal production.

Chart 4 shows the production trends since 1990 for paddy, maize and cassava.

Undisplayed Graphic
 

4. REGIONAL ANALYSIS

4.1 Java

Some 55 percent of Indonesia’s total population lives on Java, the most densely populated region, divided into the four provinces of West Java, Central Java, Yogyakarta and East Java. About 60 percent of the main crops are produced here. Some 95 percent of the paddy crop area is irrigated, although part of this area is under traditional, rain-dependent irrigation. In much of Java, paddy is planted and harvested throughout the year. Thus, in two years about five rice crops are harvested.

All provinces experienced a delay of about two months in the onset of rains. Subsequently, rains were regular and at normal levels, with the exception of East Java, which experienced below-normal rain; though they increased in late February and March. Water levels in lakes and rivers were still below normal at the time of the Mission. Paddy yields are forecast to be at similar levels as last year (some 5.2 tonnes/hectare), but production is expected to decline by about 2 percent as a result of a reduction of paddy area. Maize production is expected to grow by 14 percent, as the combined result of crop area and yield increases. However, much of the maize crop is grown in the second part of the year, notably in East Java, and the realization of the Mission’s forecast will critically hinge on El Niño developments in the months ahead. With this caveat, prospects for all other secondary crops are also favourable.

The Government has been promoting the introduction of diesel pumps in rain-dependent areas, for irrigating paddy fields through shallow tube wells. This has helped alleviate some critical water shortages in the traditional irrigation and rainfed areas in Eastern Java. It has also provided additional seeds for farmers who lost their paddy seed beds, which are prepared about a month before the expected onset of rains, because of the delayed rains. These measures have contained the reduction in planted area and a decline in yields. Still, many districts in Eastern Java expect a reduction in paddy production of up to about 10 percent.

In some areas of West and East Java, though relatively small, the Mission observed incidence of rice stem borer attacks. The continuous paddy growing, mostly using the IR64 variety, risks the proliferation of this pest. For the rest of the season, the situation should be monitored carefully.

4.2 Sumatra

As noted above, Sumatra - with a population of about 43 million - is Indonesia’s second largest food-producing area. Five of its eight provinces - Aceh, North Sumatra, West Sumatra, South Sumatra and Lampung - account for the bulk of its food production. The region is also a major producer of rubber, palm oil, coffee, and cocoa.

Except for Aceh, the onset of rains, as well as planting for the 1998 crop, was delayed by 4-10 weeks. Rains were generally irregular and below normal. Areas affected by drought include the relatively less-fertile uplands, tidal marshes and other lowland with sandy textured soils, where farming is largely rainfall dependent. Since 1997, water levels of most water resources -rivers, lakes, man-made reservoirs (embung-embung)- have fallen considerably, giving rise to concern over the adequacy of water supplies for traditional and modern irrigation during the 1998 dry season. According to the forecast of the Meteorology Board (BMG) of March 1998, the 1998 dry season could set in earlier, and rainfall could be less than normal in many areas of Sumatra.

Many farmers, notably in rainfed areas, see their capacity for purchasing agricultural inputs reduced by the combined effect of lower income due to last year’s drought and rising input prices. The Mission’s survey of local markets suggests that input prices have increased by as much as 50 percent over the last 12 months.

Given these conditions, the Mission estimates yields for paddy to decrease by 3.6 percent from last year and forecasts a reduction in production of 3.7 percent. The production shortfall is likely to be particularly marked in North Sumatra and Riau, where paddy production is forecast to be 5.5 percent and 11.5 percent, respectively, below that of last year. Yields of maize are also expected to decline (-3.8 percent), and production is expected to be down by 3.5 percent. For the other secondary crops, yield and production prospects suggest improved results compared to last year.

4.3 Sulawesi

With a population of some 14 million, Sulawesi is Indonesia’s third largest food crop producing region. It is also a major cash crop producer, including coconuts, rubber, cocoa and cashew nuts. In 1997, the region had an unusually low and irregular rainfall. Rains for the 1998 season started some two months late. In some areas in Central and North Sulawesi (e.g. the districts of Gorontalo, Sangihe Talaut, Dongala and Poso) rains were delayed up to three months. Rains were subsequently irregular and below normal throughout much of the island, affecting particularly Central and Southeast Sulawesi. As a result, water levels in rivers and lakes are reduced. For example, sharply reduced water availability from Tondano lake, an important water resource for irrigated paddy in the district of Minahasa in North Sulawesi, forced farmers to plant maize instead of rice. Similarly, in the district of Gorontalo, North Sulawesi, river water levels declined to a point where irrigated cropping became impossible.

As a result, harvested paddy area is estimated to decline by some 145 000 hectares or 13 percent in 1998 and paddy production by about 10 percent. The decline in paddy area is largely offset by area (and corresponding production) increases for maize and soybeans. There will also be some area increase for cash crops. Harvested area and production is forecast to increase for cassava and soybeans, remain about the same for groundnuts, and decrease for sweet potatoes. The outlook for yields is generally favourable as compared to last year.

Prolonged drought has reduced farm incomes as well as on-farm stocks. As farm households are forced to buy staple foods in the market, they are faced with sharply increasing prices. To meet their staple food needs, farmers are selling their livestock. As a consequence, livestock population – pigs in North and Southeast Sulawesi and cattle, goats and poultry in all four provinces - is decreasing. Shortage of feed due to high prices is exacerbating this decline.

4.4 Kalimantan

Kalimantan, divided into the four provinces of East, South, Central and West Kalimantan, is located in the central-northern part of Indonesia. Except for South Kalimantan, this is a rice-deficit region. Apart from West Kalimantan, rains came late by one to two months with less and irregular rainfall. The most drought-affected areas are East and South Kalimantan, where vegetation is drying up, including fruit trees, commercial plantation and seasonal crops. In West Kalimantan, after delayed and somewhat irregular rainfall, rains have been about normal.

Paddy production is forecast to decline by 17 percent, as the result of both reduced crop area and yields. However, the outlook for all secondary crops suggests increased production compared to 1997.

Food prices, notably for rice, groundnuts and soybeans, have almost doubled in the last 12 months, and the provincial and district branches (DOLOGs) of the State Logistics Agency (BULOG), have released twice as much rice to the market during January-March 1998 as during the same period last year.

4.5 Nusa Tenggara and Bali.

The Province of Nusa Tenggara Timur (NTT)

The province of NTT consists of four main islands, Flores, Sumba, Timor and Adonara. It is Indonesia’s driest and poorest province. While some rainfed and irrigated paddy is grown, the predominant food crops are maize as well as millet, sorghum and beans, especially mung beans. Cassava and sweet potatoes are important food-security reserve crops, and to a lesser extent taro and yams. These become especially important during the "hungry season" preceding the maize harvest in February/March and in times of drought.

After a succession of intermittent droughts in previous years, the current drought could turn out to be the worst of this century in this province, leading to an extraordinarily severe hunger period. Although most of the province is drought-stricken, the districts (Kabupaten) most affected are Sumba Timur, Flores Timur, Sikka, Ende, and Alor; in West Timor, the districts of Belu, Timor Tengah Utara and Timor Tengah Selatan are particularly affected and in need of immediate assistance. The Government has promoted the restriction of paddy planting to areas with secure irrigation and encouraged the planting of pulses instead (mungbean, soybean and groundnuts). However, the planting of pulses has been severely hampered by the lack of seeds: seed availability is reported to have been only one-third of requirements.

Contrary to the tendency of increased production of maize throughout Indonesia, production in NTT is expected to be reduced by at least 30 percent and could go as high as 40 and 50 percent. However, it is in the nature of El Niño to produce scattered and highly variable distribution of rains, which will result in many areas of food shortage amidst locations of food sufficiency.

East Timor
[ The Mission could not visit East Timor due to UN security restrictions. Information for this province was made available to the Mission by the ICRC.]

Crop conditions in the mountain areas are relatively favourable, as rains have resumed. However, drought has seriously affected maize production along the entire coastal regions, resulting in partial to total crop failure; on average, production in these regions is expected to be 40 percent of normal at best. Planting of rainfed rice was minimal. Predictions for roots and tubers are poor; their production will in no way be sufficient to compensate for reduced maize and rice supplies.

As part of their coping mechanisms, the affected populations have increasingly switched to sago consumption. However, its current over-use poses a serious threat to existing palm tree groves, the regeneration of which takes 18 years. Other elements of coping strategies include increased consumption of coconut, copra and vegetable oil. Economic activities such as fishing, the sale of livestock, especially pigs, as well as road construction programmes (paying cash wages) provide resources for the acquisition of essential staple food supplies. It is important not to disrupt these activities through properly targeted and timely free food distribution. The situation needs continuing monitoring to ensure that food assistance starting during the period of June-August, is provided to the most affected families.

The Province of Nusa Tenggara Barat (NTB)

The Province of NTB consists of two main islands, Lombok and Sumbawa. Last year’s rainfall of 884 mm was just over one-half of the 20 year mean of 1 533 mm. This crop season’s rains started with a two-months delay and continued irregularly, with amounts somewhat below average. The areas negatively affected by these rainfall patterns are mainly in the hilly areas of the southern and eastern parts of Lombok and the district of Sumbawa on Sumbawa Island. In these areas, the local government encourages farmers to plant beans and other secondary crops. At the same time, the expansion of tobacco plantations granted to a cigarette company competes with food crops for land; there are reports that farmers are discouraged from practising mixed-cropping of tobacco with secondary food crops and vegetables.

In the remaining areas, paddy production prospects are favourable. A considerable share of paddy harvested at the time of the Mission was exported to other provinces offering higher than usual prices at this time. As a result, DOLOG/NTB had to intervene in the market in order to avoid local supply shortages.

The Province of Bali

Despite the predominant role of tourism in Bali’s economy, agriculture remains an important economic activity. This sector is known for its effective system of farmers’ water management organization, called the "Subak System". This system has helped minimize the adverse effects of the current El Niño drought.

The vulnerable and marginal farmers are those who practice maize-cassava cropping systems. During the dry season, these farmers supplement their incomes through fishing where possible. Recently, the local government has encouraged agricultural diversification into cash crops such as cashew nuts, candle nuts, orange, and coconut. These efforts could lead to a decrease in the production of maize and other secondary food crops.

4.6 Maluku and Irian Jaya

The Maluku and Irian Jaya region is located in the eastern part of Indonesia. It is sparsely populated compared to the other regions, with an estimated 1998 population of 4.3 million. This is a food-deficit region depending on other food surplus producing regions.

Maluku Province

Maluku is divided into two different crop production zones: the paddy production zone in Central and North Maluku, and the maize and cassava zone mainly in the much drier southeast of Maluku. The current season’s rains were about two months late, commencing in February 1998 instead of December 1997. Because of the delay in rainfall, the planted area for paddy, maize and cassava are estimated to decrease by 10-35 % and the yields are expected to decrease by 6-7 percent for both paddy and maize. Lower yields are partially the result of reduced input use due to high prices and lower farm incomes in the wake of last year’s drought as well as increased labour cost.

The estimated total production of rice, maize and cassava for 1998 will be about 41 432 tonnes, 34 974 tonnes and 180 033 tonnes, respectively. Dolog of Maluku province is confident that it can bridge the rice deficit by purchasing from other provinces. The 1998 production of cassava and maize, which are largely consumed by the people in southeast Maluku, is projected to meet local requirements.

As regards animal products, in Maluku there is a greater reliance on fish than meat. Their fish consumption per caput is three times the national average. The expected 1998 fish production will be about 366 400 tonnes. Livestock (cattle and goat) supplies are estimated to be adequate to meet demand, although prices are rising. The poultry population has decreased considerably due to high costs of feed in the wake of the financial crisis. Prices have about doubled from Rp 5 000/kg 12 months ago to Rp 10 000/ Kg) at the time of the Mission. Prices for rice, vegetable oil and eggs have also risen, by some 20 to 50 percent.

Irian Jaya

In Irian Jaya, the rainfall pattern is also divided into two distinct zones: the southern part of Irian Jaya is similar to Java, whilst northern Irian Jaya is much wetter throughout the year. Last year Irian Java was severely affected by drought, especially the districts of Jayawijaya, Puncak and Merauke. In addition, frost had destroyed high-altitude roots and tuber crops. 80 000-90 000 people were in need of food relief. The 1997/98 wet season was delayed by about one month. Rainfall started in December and then - in contrast to most other parts of Indonesia - remained normal and regular.

The main production area of paddy in Irian Jaya is Merauke district, which accounts for one-half of total paddy production in Irian Jaya. Sweet potatoes are primarily produced in highland areas, such as the districts of Jaya Wijaya and Puncak Jaya, that account for 90 percent of the total production of this province. Maize and cassava are cultivated throughout the low land areas.

The expected yields of paddy and maize are lower than those of the last year (4 tonnes/hectare and 1.1 tonnes/hectare, respectively) due to reduced fertilizer and pesticides use as a result of farmers’ weaker purchasing power. Expected total production in 1998 of paddy is 91 156 tonnes and for maize 7 690 tonnes. For cassava and sweet potatoes production is estimated at 43 024 tonnes and 286 916 tonnes, respectively.

DOLOG’s rice stocks, recently augmented by imports from Vietnam, are adequate to meet the consumption requirements in Irian Jaya. There are additional food stocks with other agencies such as the Department of Social Affairs and NGOs. The main challenge is the distribution of food to the remote areas in Jaya Wijaya, Puncak Jaya and Merauke subdistricts, as continuing rains make air and ground transport difficult.
 



5. FOOD SUPPLY SITUATION

5.1 Food Prices and Access to Food

The combination of the drought and the financial crisis has seriously undermined Indonesia’s food security and overall economic wellbeing. Production of rice, the country’s staple food, has been significantly reduced by the drought, while the financial crisis has adversely affected the country’s import capacity, as reflected mainly by the declining availability of import credits from external suppliers. The interplay of these factors has led to soaring food prices, rapidly rising unemployment, and a sharp reduction in access to food for a large segment of the population.

A mitigating factor in the food security situation is the expected good production performance of secondary crops, which would provide some food security cushion. However, in some traditional areas of secondary crop consumption, notably in Nusa Tenggara Timur, production of these crops is estimated to be sharply reduced by drought - contrary to substantial production gains in several other areas.

The supply of livestock products is also lower due to severe cut-backs in the sector as a result of soaring prices of imported feed in the wake of the currency devaluation. The poultry sector is particularly affected, with an estimated output reduction of 30-50 percent.

Tight rice supplies and reduced stocks have led to sharp rises in consumer food prices. During the first semester of 1997, the urban consumer price index for rice rose only slightly from 101 in January to 104 in July and continued to grow in August and September. However, since October rice price inflation accelerated; by December, rice prices were 27 percent above their level 12 months before. And over the following two months, by February 1998, the rice price index jumped a further 27 points - or as much as it increased during the whole of 1997 (Chart 5). The most recent increases can not entirely be explained by the currency devaluation and the current supply scarcity - they also contain an element of expectations of higher prices in 1998, which is currently driving prices up. These increases should slow down, however, as the delayed harvest is coming in.

Food price inflation would certainly have been still higher in the absence of the stabilization operations of the National Logistics Agency (BULOG). Until recently, BULOG had a dominant position in managing the rice, sugar, wheat flour and soybean market in Indonesia, acting as commodity importer, local procurer and distributor, and seeking to stabilize prices by intervening in the market through purchases and sales at floor and ceiling prices. Under the recent agreement with the IMF, BULOG’s operations are to be liberalized, although the Agency will retain its vital role in the rice market. In addition, BULOG supplies civil servants and the military. It maintains an extensive network of go-downs and storage facilities throughout the country, reaching even the remotest islands. It therefore fulfills a social function, which can possibly not be fully met by the private sector.

Despite its important role in food distribution, BULOG’s share in the domestic rice market is less than 10 percent. During the period from 1994/95 to 1996/97, its domestic procurement averaged 1.3 million tonnes of milled rice, or about 3.4 percent of production. During the same period, BULOG’s rice imports averaged 1.7 million tons. Its market stabilization operations involved an average annual 0.7 million tons. In 1997/98, however, the shortfall in domestic production is estimated to have reduced local procurement to below 700 000 tons, increased imports and raised market operations to 2.5 million tons. In addition, BULOG distributed 1.8 million tons of rice to the budget groups, about the same as in previous years.

Undisplayed Graphic

5.2 Cereal supply/demand balance

The Mission’s forecasts of the cereal supply/demand balance and respective import requirements for 1998/99 (April/March) are summarized in Table 5. In deriving the national cereal balance, it is important to note that the balance sheet is intended to provide an overall national perspective of needs. The differences in consumption of various food items in various areas cannot obviously be reflected in such a derivation. In the context of food aid, such issues can be effectively dealt with through appropriate targeting of food aid. The cereal balance sheet is based on the following assumptions, related mainly to rice, the staple food: The subject of produce losses during harvesting and post-harvest stages has evoked considerable interest in recent years. A recent study by the Central Bureau of Statistics (CBS) suggests that most of the losses occur during harvesting, threshing and on-farm drying, when 17-18 percent of fresh paddy is estimated to be lost, largely due to archiac practices. Losses at later stages between farm and rice mill are estimated at less than 5 percent. In this report, losses refer to those at the post-harvest level as losses during harvesting are reflected in the production figures.
 
Table 5: Indonesia - Cereal Supply/Demand Balance, April 1998-March 1999 ('000 tonnes)
 
RICE  MAIZE  WHEAT
Domestic availability  33 612  9 876  369
Opening stocks  3 620  300  369
Production  29 992  9 576  0
Total utilization  37 119  9 876  4 344
Consumption  30 292  5 286  3 822
Other uses/losses  3 127  3 893  153
Closing stocks  3 700  450  369
Exportable surplus  247  0
Import requirements  3 507  0  3 975
 
 

The import requirement derived from the cereal balance amounts to 3.5 million tons of rice, the highest in Indonesia’s history. It is a continuation of a trend of growing imports in the 1990s, as shown in Chart 6.The balance also shows an import requirement of some 4 million tons of wheat. At the same time, there is likely to be a significant surplus of some 250 000 tons of maize due to the combined result of a generally good harvest and reduced feed utilization. In 1991, Indonesia had exported a record 150 000 tons of maize, but has recently been exporting an average of only 40 000 tons annually. Although maize production has increased overall during the current production year, this increase has principally been in hybrid maize from southern Sumatra, which is mainly used as animal feed in the country.

While the international community’s attention is currently focused on possibilities of assisting Indonesia with balance-of-payments support to facilitate rice imports and addressing the needs of vulnerable groups, due attention would also be desirable to provide such support for imports of wheat as well as soybeans (some 600 000 tons in 1997), thus relieving overall balance-of-payments pressures.

Undisplayed Graphic

6. FOOD ASSISTANCE REQUIREMENTS

The severe drought and the financial crisis are seriously constraining the Government’s ability to mount large scale relief operations and fully implement ongoing poverty alleviation programmes.

Although the Government is taking measures to ensure the stable supply of affordable rice throughout the country, there are several areas of the country where many households do not have the necessary purchasing power to buy rice even at subsidized prices. It can be expected that, in certain parts of the country, the number of food insecure households will increase during the upcoming dry season as the coping mechanisms of marginal households reach their limits: i) household financial, food and seed reserves have been diminished by late and repeated attempts at planting during late 1997; ii) the current rice harvest will be reduced due to drought and; iii) off farm employment opportunities will be limited due to the economic crisis.

6.1 Targeting food assistance

According to the Department of Social Affairs (Depsos) there are currently about 440 000 people living in 31 districts of 8 provinces who are in need of emergency food assistance as result of the drought. These are people who have lost their means of livelihood and are surviving on one meal a day. The resources available to deal with this caseload are inadequate; in some cases one time distributions of as little as 1.2 kg of rice per family are carried out. Depsos, using its own resources, expects to use a large portion of the 7 500 tonnes of rice originally earmarked for relief distributions during 1998 to undertake community development activities in areas of high unemployment. Unemployment is estimated to have increased to about 8-9 million during 1998 as new entrants into the job market join the ranks of the people being laid off as a result of the economic problems. The number of underemployed people both in the urban and rural areas is also high and likely to grow in the coming months.

Drought has particularly affected household food security in the rainfed agricultural areas of the following provinces: Nusa Tenggara Timur, Maluku, Kalimantan Tengah, Sulawesi Tengah, Timor Timur, Irian Jaya, Kalimantan Timur and Nusa Tenggara Barat.

According to BAPPENAS (National Development Planning Agency), in early 1997 there were more than eight million families living under chronic subsistence circumstances in the country. These are people who routinely eat less than twice a day, have inadequate clothing and do not have the means to pay for medical services. Using historic health and food insecurity indicators, combined with current crop prospects, all districts of the country have been ranked and the bottom third identified as most likely to experience significant household food insecurity. It is estimated that 1.56 million families (about 7.8 million people) in 53 districts of 15 provinces will likely experience acute household food insecurity through the upcoming dry season until the next major crop is harvested in March 1999. These affected districts are located in the provinces of Jawa Tengah, Aceh, Sumatera Selatan, Benkulu, Lampung, Kalimantan Selatan, Sulawesi Selatan, Sulawesi Tenggara, Nusa Tenggara Timur, Maluku, Sulawesi Tengah, Timor Timur, Irian Jaya, Kalimantan Timur and Nusa Tenggara Barat.

The Government of Indonesia has a policy of providing relief food assistance for only a few days after a natural calamity. If the need persists, local governments try to organize community development labour intensive mini projects at the village level. Workers on these projects receive either cash, food or a combination of both as an incentive to participate on these self-help projects. Funding could come from donations from the local wealthy, or government funds (depending on the severity of the natural disaster, funding comes from district, provincial or central government sources).

With the assistance of international partners the Government is reinforcing the social safety net in order to address the needs of the people who fall below the subsistence level. Unfortunately, the resources available for strengthening this social welfare net are not expected to be sufficient to cover all the affected areas, particularly the very poor remote rural areas. The Government has, therefore, requested external food assistance from international humanitarian agencies. In support of government policy, food-for-work activities will be undertaken in collaboration with line ministries, local governments or NGOs. In addition, blended food will be distributed in selected areas to the most seriously affected pregnant women and nursing women and children under five. General relief distributions would be effected through Depsos.

The following table provides an overview of the activities of external food aid providers currently active or planning activities in Indonesia during 1998. WFP will also be an active partner is addressing household food insecurity in the areas of the country that have been badly affected by drought.
 

Table 6: Current food aid distribution by NGOs (tonnes) 1/
 
Organisation  Commodity  Quantity  Beneficiaries
CARE  Rice  19 600  134 247
Wheat (monetization)  5 000 
CRS  Rice  12 500  85 616
Wheat Soya Blend  1 500  13 699
ICRC 2/  various  15 000
World Vision  Rice  2 400  85 000
 

6.2 WFP food aid strategy and programme

The Indonesian Government plans to import approximately 1.5 million tonnes between April and September 1998. This would leave an uncovered deficit of 2 million tonnes, for which international assistance will be required in the form of rice loans, grants, concessionary imports and targeted food aid. In response to an official request from the Government of Indonesia, WFP plans to assist the government in its efforts to reinforce the social safety net in Indonesia until the next major crop is harvested in March/April 1999.

Under a planned WFP Emergency Operation, implementing partners with ongoing activities in the most drought affected areas of the country will be identified. By working in partnership with existing operations, start up time will be reduced and operational costs minimized. Implementing partners could include collaboration with line ministries, local governments or NGOs.

There is a need for the UN System and Government to collaborate in coordinating an increasing number of food aid providers. WFP would coordinate with other food aid providers to eliminate the possibility of duplicating efforts and broaden the overall coverage of food assistance.

The provision of WFP emergency food assistance would fall under three broad categories.

6.3 Food aid logistics

The challenge of supplying food in a country that consists of 6 000 inhabited islands covering an area of 5.1 million km2 can only be overcome if the international community takes advantage of the infrastructure that has been put in place by the Government. BULOG has the mandate and the capacity to ensure the availability and distribution of rice, the main staple, throughout the country.

In accordance with WFP policy the following logistics chain is being proposed:

WFP would assume responsibility and cost of delivery of food consignments up to the port of first entry. BULOG, using its countrywide network of 1,506 warehouses, with a covered storage capacity of 3.5 million tonnes, would arrange the transport of rice to district warehouses (Subdulog) nearest to prospective distribution sites. As BULOG is responsible for the provision of a monthly ration of rice to each civil servant in the country, it has set up the necessary mechanisms to supply all of its warehouses on a continuous basis. It is therefore not expected that major operational difficulties will be encountered to supply donated rice to the district warehouses where WFP operations will be active. It is anticipated that BAPPENAS would reimburse BULOG for positioning food at the district level.

In view of the rugged terrain on many islands, transport from the SubDulog warehouse to the sub districts will often have to be done using a combination of small coasters and traditional boats. The physical means to do so are available. The district governments have the required manpower and experience to stock the subdistricts. In some districts the implementing line ministry or district government will have the means to arrange transport from the Subdulog to the recipient subdistrict. However, indications are that most districts would require financial assistance. Under unusually adverse conditions, WFP may be called upon to assist in the transport from the Subdulog stores to the recipient subdistricts. Transport from the subdistrict to the recipient villages would be organized by village committees.
 
 
 

This report is prepared on the responsibility of the FAO and WFP Secretariats with information from official and unofficial sources. Since conditions may change rapidly, please contact the undersigned for further information if required. 
Abdur RashidChief,
GIEWS FAO 
Telex 610181 FAO I 
Fax: 0039-6-5705-4495 
E-mail:GIEWS1@FAO.ORG 
Ms. J. Cheng-Hopkins 
Regional Director, OAP, WFP 
Telex: 626675 WFP 1 
Fax: 0039-6-6513-2209 
E-Mail: Judy.Cheng-Hopkins@WFP.ORG
The Special Alerts/Reports can also be received automatically by E-mail as soon as these are published, subscribing to the GIEWS/Alerts report ListServ. To do so, please send an E-mail to the FAO-Mail-Server at the following address: mailserv@mailserv.fao.org, leaving the subject blank, with the following message: 
    subscribe GIEWSAlerts-L 
To be deleted from the list, send the message: 
    unsubscribe GIEWSAlerts-L 

TOC Return to menu